Operating income for the first quarter of 2009 was $24.3 million, down approximately 58 percent from the first quarter of 2008. Operating margin in the first quarter of 2009 was 8.4 percent, compared to an operating margin of 16.3 percent in the first quarter of 2008. Amortization of intangibles was $12.3 million in the first quarter of 2009 compared to $10.8 million in the first quarter of 2008. The impact of stock-based compensation expense was $4.2 million compared to $4.0 million in the first quarter of 2008. There was also a $4.5 million restructuring expense, a $0.2 million inventory step-up charge and a $0.5 million charge related to acquisitions in the first quarter of 2009 compared to a $0.2 million inventory step-up charge in the first quarter of 2008. Excluding these impacts, non-GAAP operating income of $45.9 million was down 37 percent compared to the first quarter of 2008. Non-GAAP operating margin was 15.9 percent in the first quarter of 2009, compared to 20.5 percent in the first quarter of 2008 and 10.7 percent in the fourth quarter of 2008.
First quarter 2009 net income was $17.5 million, down 56 percent compared to the first quarter of 2008. Diluted earnings per share for the first quarter of 2009 was $0.14 compared to diluted earnings per share of $0.32 in the first quarter of 2008.
Adjusting for the items noted above, non-GAAP net income of $33.7 million for the first quarter of 2009 was down 33 percent compared to the first quarter of 2008. Non-GAAP earnings per share for the first quarter of 2009 was $0.28 compared to non-GAAP earnings per share of $0.40 in the first quarter of 2008.
"The first quarter results were in line with our expectations. We continue to see considerable uncertainty in our markets with the resulting financial impact focused within our Engineering & Construction segment," said Steven W. Berglund, Trimble's president and chief executive officer. "Although the level of interest in our productivity improving technology remains high in the E&C markets, underlying business confidence did not improve during the quarter which impacted demand. Our Field Solutions segment demonstrated year over year growth in revenue and profits as a result of relatively strong performance in agriculture. While our Mobile Solutions segment did not grow year over year, the outlook for booking a number of enterprise level accounts in the first half of the year remains good," Berglund continued. "Overall, until some level of business confidence is restored, full year 2009 results will remain difficult to forecast. We took cost reduction actions in the quarter, and will take additional steps as conditions require, to align our costs with the lower revenue level. Beyond short term actions to improve profitability, our other focus is to take advantage of our strong balance sheet, cash flow, and organizational capabilities to enhance our market leadership."
Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of inventory step-up charge, merger and acquisition charges, and the impact of stock-based compensation expense.
Engineering and Construction (E&C)
First quarter 2009 E&C revenue was $127.7 million, down approximately 34 percent when compared to the first quarter of 2008. The decline in demand continued to primarily be driven by recessionary conditions in the U.S. and Europe.
Operating income in E&C for the first quarter 2009 was $ 2.5 million, or 2.0 percent of revenue, compared to $37.0 million, or 19.0 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in E&C was $3.8 million, or 3.0 percent of revenue, compared to $37.9 million, or 19.5 percent of revenue, in the first quarter of 2008. The decline in operating margin was largely due to the drop in revenue.
Field Solutions
First quarter 2009 Field Solutions revenue was $99.2 million, up 13 percent when compared to the first quarter of 2008. Growth was driven by sales of agriculture products and acquisitions.
Operating income in Field Solutions for the first quarter 2009 was $42.2 million, or 42.6 percent of revenue, compared to $35.1 million, or 39.9 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Field Solutions was $42.4 million, or 42.8 percent of revenue, compared to $35.3 million, or 40.1 percent of revenue in the first quarter of 2008. Growth in Field Solutions' margin was driven by operating leverage resulting from increased revenue and product mix.
Mobile Solutions
First quarter 2009 Mobile Solutions revenue was $38.3 million, down approximately 13 percent when compared to the first quarter of 2008. The year over year decline in revenue was primarily attributable to the fact that the first quarter of 2008 benefitted from the completion of deliverables for two large contracts.
Operating income in Mobile Solutions for the first quarter 2009 was $3.1 million, or 8.2 percent of revenue, compared to $2.5 million, or 5.6 percent of revenue in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Mobile Solutions was $4.3 million, or 11.2 percent of revenue, up from 8.8 percent of revenue in the first quarter of 2008. The improvement is primarily due to reduced operating expenses from restructuring.
Advanced Devices
First quarter 2009 Advanced Devices revenue was $23.9 million, down approximately 18 percent when compared to the first quarter of 2008. The decline in first quarter revenue was due to slower sales of components which are sold to OEMs.
Operating income in Advanced Devices for the first quarter 2009 was $4.3 million, or 18.1 percent of revenue, compared to $4.7 million, or 16.1 percent of revenue, in the first quarter of 2008.
In the first quarter of 2009, non-GAAP operating income in Advanced Devices was $4.6 million, or 19.4 percent of revenue, compared to 17.3 percent of revenue in the first quarter of 2008. Margin improvement was the result of product mix.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.
Forward Looking Guidance
For the second quarter of 2009 Trimble continues to see general uncertainty that limits the ability to provide precise guidance. Trimble is guiding second quarter 2009 revenue in the range of $300 million plus or minus five percent. At a point estimate of $300 million in revenue, Trimble expects second quarter 2009 GAAP earnings per share of $0.21 and non-GAAP earnings per share of $0.32. Non-GAAP guidance for the second quarter of 2009 excludes the amortization of intangibles of $13.3 million related to previous acquisitions and the anticipated impact of stock-based compensation expense of $4.1 million. Both GAAP and non-GAAP guidance use a 27 percent tax rate and assume 121 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on April 28, 2009 at 1:30 p.m. PT to review its first quarter 2009 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (866) 638-7054 (U.S.) or (706) 679-7097 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 95301212. The replay will also be available on the Web at the address above.
About Trimble
Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location--including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif.
For more information visit Trimble's Web site at www.trimble.com.
Safe Harbor
Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, our ability to improve overall operating margins, revenue and earnings per share that Trimble expects to report in the second quarter 2009, changes in tax-rate, and estimated restructuring costs. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. If the current global economic crisis and recessionary conditions in the U.S. and Europe show no signs of recovery it may negatively impact our customers' purchasing decisions worldwide including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations and other financial results. Whether the Company achieves growth will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Apr-03, Mar-28,
2009 2008
---- ----
Revenue $288,954 $355,296
Cost of sales 144,996 180,920
------- -------
Gross margin 143,958 174,376
------- -------
Gross margin (%) 49.8% 49.1%
Operating expenses
Research and development 34,137 37,345
Sales and marketing 48,935 51,158
General and administrative 26,042 22,690
Restructuring 3,623 -
Amortization of purchased intangible assets 6,969 5,143
----- -----
Total operating expenses 119,706 116,336
------- -------
Operating income 24,252 58,040
Non-operating income (expense), net
Interest income 199 457
Interest expense (493) (762)
Foreign currency transaction gain, net 184 968
Income from joint ventures, net 168 2,015
Other expense, net (714) (940)
---- ----
Total non-operating income (expense), net (656) 1,738
---- -----
Income before taxes 23,596 59,778
Income tax provision 5,899 19,732
----- ------
Net income 17,697 40,046
Less: Net income (loss) attributable to
noncontrolling interests 232 (21)
--- ---
Net income attributable to Trimble $17,465 $40,067
======= =======
Earnings per share attributable to Trimble:
Basic $0.15 $0.33
----- -----
Diluted $0.14 $0.32
----- -----
Shares used in calculating earnings per share:
Basic 119,260 121,467
------- -------
Diluted 120,926 125,159
------- -------
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Apr-03, Jan-02,
2009 2009
---- ----
Assets
Current assets:
Cash and cash equivalents $146,827 $147,531
Accounts receivables, net 220,404 204,269
Other receivables 7,382 17,540
Inventories, net 165,413 160,893
Deferred income taxes 40,015 41,810
Other current assets 17,664 16,404
------ ------
Total current assets 597,705 588,447
Property and equipment, net 48,458 50,175
Goodwill 723,252 715,571
Other purchased intangible assets, net 222,752 228,901
Other non-current assets 49,944 51,922
------ ------
Total assets $1,642,111 $1,635,016
========== ==========
Liabilities
Current liabilities:
Current portion of long-term debt $196 $124
Accounts payable 62,131 49,611
Accrued compensation and benefits 43,353 41,291
Deferred revenue 61,876 55,241
Accrued warranty expense 14,207 13,332
Other accrued liabilities 45,534 63,719
------ ------
Total current liabilities 227,297 223,318
Non-current portion of long-term debt 151,436 151,464
Non-current deferred revenue 10,257 12,418
Deferred income taxes 38,112 42,207
Other non-current liabilities 58,763 61,553
------- -------
Total liabilities 485,865 490,960
------- -------
Commitments and contingencies
Equity
Shareholders' equity:
Common stock 693,653 684,831
Retained earnings 445,386 427,921
Accumulated other comprehensive income 13,243 27,649
------ ------
Total Trimble shareholders' equity 1,152,282 1,140,401
Noncontrolling interests 3,964 3,655
----- -----
Total equity 1,156,246 1,144,056
--------- ---------
Total liabilities and equity $1,642,111 $1,635,016
========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Apr-03, Mar-28,
2009 2008
Cash flow from operating activities:
Net Income $17,465 $40,067
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation expense 4,463 4,571
Amortization expense 12,298 10,848
Provision for doubtful accounts 2,212 38
Amortization of debt issuance cost 56 56
Deferred income taxes (1,606) (885)
Stock-based compensation 4,226 3,982
Noncontrolling interest in consolidated
subsidiaries 309 (33)
Equity gain from joint ventures (168) (2,015)
Excess tax benefit for stock-based
compensation (21) (1,992)
Provision for excess and obsolete
inventories 904 2,103
Other non-cash items (2,135) 235
Add decrease (increase) in assets:
Accounts receivables (18,712) (39,280)
Other receivables 5,486 516
Inventories (7,327) (3,437)
Other current and non-current assets 730 (191)
Add increase (decrease) in liabilities:
Accounts payable 12,682 3,760
Accrued compensation and benefits 2,391 (10,557)
Accrued liabilities 5,801 (1,648)
Deferred revenue 4,107 2,034
Income taxes payable - 12,547
- ------
Net cash provided by operating activities 43,161 20,719
------ ------
Cash flows from investing activities:
Acquisitions of businesses, net of
cash acquired (17,294) (39,593)
Acquisition of property and equipment (3,261) (3,711)
Acquisition of intangible assets (26,001) (179)
Other 14 136
-- ---
Net cash used in investing activities (46,542) (43,347)
------- -------
Cash flow from financing activities:
Issuance of common stock 4,602 8,483
Excess tax benefit for stock-based
compensation 21 1,992
Repurchase and retirement of common stock - (25,870)
Payments on long-term debt and revolving
credit lines - (312)
- ----
Net cash provided by (used in) financing
activities 4,623 (15,707)
----- -------
Effect of exchange rate changes on cash and cash
equivalents (1,946) 6,512
------ -----
Net decrease in cash and cash equivalents (704) (31,823)
Cash and cash equivalents - beginning of period 147,531 103,202
------- -------
Cash and cash equivalents - end of period $146,827 $71,379
======== =======
GAAP TO NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
Apr-03, Mar-28,
2009 2008
---- ----
Dollar % of Dollar % of
Amount Revenue Amount Revenue
------ ------- ------ -------
GROSS MARGIN:
GAAP gross margin: $143,958 49.8% $174,376 49.1%
Restructuring ( A ) 865 0.3% - 0.0%
Amortization of
purchased intangibles ( B ) 5,285 1.8% 5,661 1.6%
Stock-based
compensation ( C ) 438 0.2% 493 0.1%
Amortization of
acquisition-related
inventory step-up ( D ) 223 0.1% 183 0.1%
--- --- --- ---
Non-GAAP gross margin: $150,769 52.2% $180,713 50.9%
-------- ---- -------- ----
OPERATING
EXPENSES:
GAAP operating expenses: $119,706 $116,336
Restructuring ( A ) (3,623) -
Amortization of
purchased intangibles ( B ) (6,969) (5,143)
Stock-based
compensation ( C ) (3,788) (3,489)
Merger and Acquisition
Costs ( E ) (465) -
---- -
Non-GAAP operating
expenses: $104,861 $107,704
-------- --------
OPERATING
INCOME:
GAAP operating income: $24,252 8.4% $58,040 16.3%
Restructuring ( A ) 4,488 1.5% - 0.0%
Amortization of
purchased intangibles ( B ) 12,254 4.2% 10,804 3.0%
Stock-based
compensation ( C ) 4,226 1.5% 3,982 1.1%
Amortization of
acquisition-related
inventory step-up ( D ) 223 0.1% 183 0.1%
Merger and Acquisition
Costs ( E ) 465 0.2% - 0.0%
--- --- - ---
Non-GAAP operating
income: $45,908 15.9% $73,009 20.5%
------- ---- ------- ----
NET INCOME:
GAAP net income: $17,465 $40,067
Restructuring ( A ) 4,488 -
Amortization of
purchased intangibles ( B ) 12,254 10,804
Stock-based
compensation ( C ) 4,226 3,982
Amortization of
acquisition-related
inventory step-up ( D ) 223 183
Merger and Acquisition
Costs ( E ) 465 -
Income tax effect on
non-GAAP adjustments ( F ) (5,414) (4,941)
------ ------
Non-GAAP net income: $33,707 $50,095
======= =======
DILUTED NET
INCOME PER
SHARE:
GAAP diluted net income per
share: $0.14 $0.32
Restructuring ( A ) 0.04 -
Amortization of
purchased intangibles ( B ) 0.10 0.09
Stock-based
compensation ( C ) 0.04 0.03
Amortization of
acquisition-related
inventory step-up ( D ) - -
Merger and Acquisition
Costs ( E ) - -
Income tax effect on
non-GAAP adjustments ( F ) (0.04) (0.04)
----- -----
Non-GAAP diluted net
income per share: $0.28 $0.40
===== =====
SHARES USED TO
COMPUTE DILUTED NET
INCOME PER SHARE:
GAAP and Non-GAAP shares
used to compute
net income per share: 120,926 125,159
======= =======
OPERATING
LEVERAGE:
Increase (decrease) in non-
GAAP operating income $(27,101)
Increase (decrease) in revenue $(66,342)
Operating leverage (increase in
non-GAAP operating
income as a % of increase
in revenue) N/A
The non-GAAP financial measures included in the table above are non-GAAP
gross margin, non-GAAP operating expenses, non-GAAP operating income, non-
GAAP net income and non-GAAP diluted net income per share, which adjust
for the following items: expenses related to acquisitions, stock-based
compensation expense and restructuring charges. Management uses these
non-GAAP measures to assess trends in its business and for budgeting
purposes, as many of these excluded items are non-cash. In addition, we
believe that the presentation of these non-GAAP financial measures is
useful to investors for the reasons associated with each of the adjusting
items as described below.
( A ) Restructuring. The amounts recorded are primarily for employee
compensation resulting from reductions in employee headcount in
connection with our company restructurings and we believe they are
not directly related to the operation of our business.
( B ) Amortization of purchased intangibles. The amounts recorded as
amortization of purchased intangibles arise from prior acquisitions
and are non-cash in nature. We exclude these expenses because we
believe they are not reflective of ongoing operating results in the
period incurred and are not directly related to the operation of our
business.
( C ) Stock-based compensation. We exclude these stock-based compensation
expenses because they are non-cash expenses that we believe are not
reflective of ongoing operation results. For the three months ended
April 3, 2009 and March 28, 2008, stock-based compensation was
allocated as follows:
Three Months
Ended
------------
Apr-03, Mar-28,
2009 2008
---- ----
Cost of sales $438 $493
Research and development 784 917
Sales and Marketing 1,004 1,030
General and administrative 2,000 1,542
----- -----
$4,226 $3,982
------ ------
( D ) Amortization of acquisition-related inventory step-up. The purchase
accounting entries associated with our business acquisitions require
us to record inventory at its fair value, which is sometimes greater
than the previous book value of the inventory. The increase in
inventory value is amortized to cost of sales over the period that
the related product is sold. We exclude inventory step-up
amortization from our non-GAAP measures because we do not believe it
is reflective of our ongoing operating results, and it is not used
by management to assess the core profitability of our business
operations.
( E ) Merger and acquisition costs: These charges consist of external and
incremental costs resulting directly from merger and acquisition
activities. Because these expenses are non-recurring and unique to
specific acquisitions, we believe they are not indicative of future
operating results and that investors benefit from an understanding
of our operating results without giving effect to them.
( F ) Income tax effect on non-GAAP adjustments. This amounts adjusts the
provision for income taxes to reflect the effect of the non-GAAP
adjustments on non-GAAP operating income.
NON-GAAP RECONCILIATION
REPORTING SEGMENTS
(Dollars in thousands)
(Unaudited)
Reporting Segments
------------------
Engineering
and Field Mobile Advanced
Construction Solutions Solutions Devices
------------ --------- --------- -------
THREE MONTHS ENDED
APRIL 3, 2009:
Revenue $127,651 $99,157 $38,288 $23,858
GAAP operating income
before corporate
allocations: $2,509 $42,203 $3,148 $4,312
Stock-based
compensation ( G ) 1,308 222 1,144 325
----- --- ----- ---
Non-GAAP operating
income before corporate
allocations: $3,817 $42,425 $4,292 $4,637
------ ------- ------ ------
Non-GAAP operating
margin (% of segment
external
net revenues) 3.0% 42.8% 11.2% 19.4%
THREE MONTHS ENDED MARCH
28, 2008:
Revenue $194,180 $88,037 $44,011 $29,068
GAAP operating income
before corporate
allocations: $36,954 $35,095 $2,453 $4,692
Stock-based
compensation ( G ) 971 198 1,408 327
--- --- ----- ---
Non-GAAP operating
income before corporate
allocations: $37,925 $35,293 $3,861 $5,019
------- ------- ------ ------
Non-GAAP operating
margin (% of segment
external
net revenues) 19.5% 40.1% 8.8% 17.3%
( G ) Stock-based Compensation. The amounts consist of expenses for
employee stock options and purchase rights under our employee stock
purchase plan determined in accordance with SFAS 123(R), which
became effective for us on January 1, 2006. We discuss our
operating results by segment with and with-out stock-based
compensation expense, as we believe it is useful to investors to
understand the impact of the application of SFAS 123(R) to our
results of operations. Stock-based compensation not allocated to
the reportable segments was approximately $1,227K and $1,078K for
the three months ended April 3, 2009 and March 28, 2008,
respectively.
Web site: http://www.trimble.com/